BLOOMFIELD HILLS, Mich., Oct. 21 /PRNewswire-FirstCall/ -- Taubman Centers, Inc. today reported financial results for the quarter and year-to-date periods ended September 30, 2008.
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Net income allocable to common shareholders per diluted common share (EPS) for the quarter ended September 30, 2008 was $0.17, up from $0.15 during the third quarter of 2007. EPS for the nine month period ended September 30, 2008 was $0.26 versus $0.50 for the nine month period ended September 30, 2007.
For the quarter ended September 30, 2008, Funds from Operations (FFO) per diluted share was $0.74, up 8.8 percent from $0.68 per share for the quarter ended September 30, 2007. For the nine months ended September 30, 2008, FFO per diluted share was $2.08, up 3.5 percent from $2.01 per share for the nine months ended September 30, 2007.
"Given the current environment, we're very pleased that our business continues to generate solid results," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. "Our performance was driven by increases in rents from our existing portfolio and the contribution from The Mall at Partridge Creek (Clinton Township, Mich.), which opened in October 2007."
Increases in Occupancy, Sales and Rents
Comparable center occupancy for the portfolio was 90.6 percent at September 30, 2008, up 0.4 percent from 90.2 percent on September 30, 2007. Comparable center leased space at September 30, 2008 was 92.5 percent versus 93.4 percent on September 30, 2007.
Rents in Taubman's consolidated portfolio averaged $44.20 for the quarter, an increase of 3.2 percent from the third quarter of 2007. Rents in Taubman's consolidated portfolio averaged $44.40 for the year-to-date period, an increase of 2.8 percent from the first nine months of 2007. In the Unconsolidated Joint Ventures, rents averaged $44.48 for the quarter, an increase of 2.7 percent from the third quarter of 2007. Rents in the Unconsolidated Joint Ventures averaged $44.71 for the year-to-date period, an increase of 5.6 percent from the first nine months of 2007.
Mall tenant sales per square foot increased 0.5 percent for the quarter and 2.3 percent for the nine months ended September 30. "We're pleased to continue to report tenant sales per square foot growth during a time of such economic uncertainty," said Mr. Taubman. "The consumer clearly moderated spending as the quarter progressed. Nonetheless, shoppers continue to make our well-leased centers preferred destinations."
Strong Balance Sheet
Taubman is financed with property-specific secured debt and has no maturities until fall 2010, when its share of three loans totaling $264 million mature. The company's secured credit lines total $590 million and mature in 2011 with a one year extension option to 2012 on $550 million of the lines. As of September 30, $225 million is utilized.
"In these challenging capital markets, we are pleased that our conservative financial approach is allowing us to continue to pursue our growth strategies," said Lisa A. Payne, Taubman Centers vice chairman and chief financial officer.
Guidance
For the full year 2008, the company expects to be at the lower end of its previously announced FFO per share range of $3.01 to $3.07. Net income allocable to common shareholders for the year is expected to be in the range of $0.64 to $0.84 per share.
Supplemental Investor Information Available
The company provides supplemental investor information along with its earnings announcements. It is available online at http://www.taubman.com/ under "Investor Relations." This packet includes the following information:
-- Income Statements -- Earnings Reconciliations -- Changes in Funds from Operations and Earnings Per Share -- Components of Other Operating Income, Other Operating Expense and Gains on Land Sales, Interest Income and Other Non-operating Income -- Recoveries Ratio Analysis -- Balance Sheets -- Debt Summary -- Other Debt, Equity, and Certain Balance Sheet Information -- Construction -- Capital Spending -- Operational Statistics -- Owned Centers -- Major Tenants in Owned Portfolio -- Anchors in Owned Portfolio Investor Conference Call
The company will provide an online Web simulcast and rebroadcast of its 2008 third quarter earnings release conference call in which the company will review the results for the quarter, progress on its developments, its financing plans and update its guidance. The live broadcast of the conference call will be available online at http://www.taubman.com/ under "Investor Relations," http://www.earnings.com/ , http://www.streetevents.com/ and http://www.investorcalendar.com/ on October 22 beginning at 10:00 a.m. Eastern Time. The online replay will follow shortly after the call and continue for approximately 90 days. In addition, the conference call will be available as a podcast at http://www.reitcafe.com/.
Taubman Centers is a real estate investment trust engaged in the development and management of regional and super regional shopping centers. Taubman's 24 U.S. owned and/or managed properties, the most productive in the industry, serve major markets from coast to coast. The company's Taubman Asia subsidiary is developing retail projects in Macao, China and Incheon, South Korea. Taubman Centers is headquartered in Bloomfield Hills, Michigan. For more information about Taubman, visit http://www.taubman.com/.
For ease of use, references in this press release to "Taubman Centers" or "Taubman" mean Taubman Centers, Inc. or one or more of a number of separate, affiliated entities. Business is actually conducted by an affiliated entity rather than Taubman Centers, Inc. itself.
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements reflect management's current views with respect to future events and financial performance. Actual results may differ materially from those expected because of various risks and uncertainties, including, but not limited to changes in general economic and real estate conditions, changes in the interest rate environment and the availability of financing, and adverse changes in the retail industry. Other risks and uncertainties are discussed in the company's filings with the Securities and Exchange Commission including its most recent Annual Report on Form 10-K.
TAUBMAN CENTERS, INC. Table 1 - Summary of Results For the Three and Nine Months Ended September 30, 2008 and 2007 (in thousands of dollars, except as indicated) Three Months Ended Nine Months Ended 2008 2007 2008 2007 Income before minority and preferred interests 27,836 25,461 72,766 78,013 Minority share of consolidated joint ventures (1) (1,416) (1,044) (3,722) (3,578) Distributions in excess of minority share of income of consolidated joint ventures (1) (1,578) (1,806) (7,973) (2,847) Minority share of income of TRG (1) (7,445) (6,849) (17,866) (21,777) Distributions in excess of minority share of income of TRG (1) (3,927) (3,640) (16,268) (9,910) TRG preferred distributions (615) (615) (1,845) (1,845) Net income 12,855 11,507 25,092 38,056 Preferred dividends (3,658) (3,658) (10,975) (10,975) Net income allocable to common shareowners 9,197 7,849 14,117 27,081 Net income per common share - basic 0.17 0.15 0.27 0.51 Net income per common share - diluted 0.17 0.15 0.26 0.50 Beneficial interest in EBITDA - Consolidated Businesses (2) 78,973 72,640 231,550 218,650 Beneficial interest in EBITDA - Unconsolidated Joint Ventures (2) 25,636 25,543 71,394 70,963 Funds from Operations (2) 59,712 54,973 167,681 164,846 Funds from Operations allocable to TCO (2) 39,764 36,205 111,588 108,700 Funds from Operations per common share - basic (2) 0.75 0.69 2.11 2.05 Funds from Operations per common share - diluted (2) 0.74 0.68 2.08 2.01 Weighted average number of common shares outstanding - basic 52,908,924 52,456,144 52,815,246 53,093,894 Weighted average number of common shares outstanding - diluted 53,412,236 53,073,989 53,370,218 53,731,959 Common shares outstanding at end of period 52,948,733 52,308,307 Weighted average units - Operating Partnership - basic 79,450,825 79,648,017 79,365,719 80,518,440 Weighted average units - Operating Partnership - diluted 80,825,398 81,137,124 80,791,952 82,027,766 Units outstanding at end of period - Operating Partnership 79,481,177 79,169,604 Ownership percentage of the Operating Partnership at end of period 66.6% 66.1% Number of owned shopping centers at end of period 23 22 23 22 Operating Statistics: Mall tenant sales (3) 1,112,502 1,075,465 3,312,137 3,179,929 Ending occupancy 90.5% 90.0% 90.5% 90.0% Ending occupancy - comparable (4) 90.6% 90.2% 90.6% 90.2% Average occupancy 90.4% 89.8% 90.1% 89.8% Average occupancy - comparable (4) 90.5% 90.0% 90.3% 90.0% Leased space at end of period 92.4% 93.3% 92.4% 93.3% Leased space at end of period - comparable (4) 92.5% 93.4% 92.5% 93.4% Mall tenant occupancy costs as a percentage of tenant sales - Consolidated Businesses (3) 15.6% 14.8% 15.6% 15.2% Mall tenant occupancy costs as a percentage of tenant sales - Unconsolidated Joint Ventures (3) 14.7% 14.1% 14.1% 13.6% Rent per square foot - Consolidated Businesses (4) 44.20 42.84 44.40 43.21 Rent per square foot - Unconsolidated Joint Ventures (4) 44.48 43.32 44.71 42.35 (1) Because the net equity balances of the Operating Partnership and the outside partners in certain consolidated joint ventures are less than zero, the income allocated to the minority and outside partners during the three and nine months ended September 30, 2008 and 2007 is equal to their share of distributions. The net equity of these minority partners is less than zero due to accumulated distributions in excess of net income and not as a result of operating losses. (2) Beneficial Interest in EBITDA represents the Operating Partnership's share of the earnings before interest, income taxes, and depreciation and amortization of its consolidated and unconsolidated businesses. The Company believes Beneficial Interest in EBITDA provides a useful indicator of operating performance, as it is customary in the real estate and shopping center business to evaluate the performance of properties on a basis unaffected by capital structure. The National Association of Real Estate Investment Trusts (NAREIT) defines Funds from Operations (FFO) as net income (loss) (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from extraordinary items and sales of properties, plus real estate related depreciation and after adjustments for unconsolidated partnerships and joint ventures. The Company believes that FFO is a useful supplemental measure of operating performance for REITs. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, the Company and most industry investors and analysts have considered presentations of operating results that exclude historical cost depreciation to be useful in evaluating the operating performance of REITs. FFO is primarily used by the Company in measuring performance and in formulating corporate goals and compensation. These non-GAAP measures as presented by the Company are not necessarily comparable to similarly titled measures used by other REITs due to the fact that not all REITs use common definitions. None of these non-GAAP measures should be considered alternatives to net income as an indicator of the Company's operating performance, and they do not represent cash flows from operating, investing, or financing activities as defined by GAAP. (3) Based on reports of sales furnished by mall tenants. (4) Statistics exclude The Mall at Partridge Creek and The Pier Shops at Caesars. The 2007 statistics have been restated to include comparable centers to 2008. TAUBMAN CENTERS, INC. Table 2 - Income Statement For the Three Months Ended September 30, 2008 and 2007 (in thousands of dollars) 2008 2007 UNCONSOLIDATED UNCONSOLIDATED CONSOLIDATED JOINT CONSOLIDATED JOINT BUSINESSES VENTURES(1) BUSINESSES VENTURES(1) REVENUES: Minimum rents 87,401 39,187 81,273 37,480 Percentage rents 3,262 1,681 3,208 1,299 Expense recoveries 60,838 25,011 53,624 23,911 Management, leasing, and development services 3,316 3,881 Other 8,896 1,175 8,667 1,675 Total revenues 163,713 67,054 150,653 64,365 EXPENSES: Maintenance, taxes, and utilities 48,741 17,201 44,158 15,580 Other operating 18,482 3,892 16,574 3,048 Management, leasing, and development services 1,843 2,074 General and administrative 6,790 7,414 Interest expense 36,039 16,471 33,628 15,980 Depreciation and amortization 35,464 9,923 33,757 9,518 Total expenses 147,359 47,487 137,605 44,126 Gains on land sales and other nonoperating income 411 115 1,138 375 16,765 19,682 14,186 20,614 Income tax expense (218) Equity in income of Unconsolidated Joint Ventures 11,289 11,275 Income before minority and preferred interests 27,836 25,461 Minority and preferred interests: TRG preferred distributions (615) (615) Minority share of consolidated joint ventures (1,416) (1,044) Distributions in excess of minority share of income of consolidated joint ventures (1,578) (1,806) Minority share of income of TRG (7,445) (6,849) Distributions in excess of minority share of income of TRG (3,927) (3,640) Net income 12,855 11,507 Preferred dividends (3,658) (3,658) Net income allocable to common shareowners 9,197 7,849 SUPPLEMENTAL INFORMATION: EBITDA - 100% 88,268 46,076 81,571 46,112 EBITDA - outside partners' share (9,295) (20,440) (8,931) (20,569) Beneficial interest in EBITDA 78,973 25,636 72,640 25,543 Beneficial interest expense (31,088) (8,570) (29,892) (8,369) Beneficial income tax expense (218) Non-real estate depreciation (748) (676) Preferred dividends and distributions (4,273) (4,273) Funds from Operations contribution 42,646 17,066 37,799 17,174 Net straightline adjustments to rental revenue, recoveries, and ground rent expense at TRG % 251 162 432 260 (1) With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest. The Company accounts for its investments in the Unconsolidated Joint Ventures under the equity method. TAUBMAN CENTERS, INC. Table 3- Income Statement For the Year to Date Periods Ended September 30, 2008 and 2007 (in thousands of dollars) 2008 2007 UNCONSOLIDATED UNCONSOLIDATED CONSOLIDATED JOINT CONSOLIDATED JOINT BUSINESSES VENTURES(1) BUSINESSES VENTURES(1) REVENUES: Minimum rents 261,554 116,395 239,435 113,051 Percentage rents 7,162 3,600 6,513 3,930 Expense recoveries 178,686 69,089 162,170 69,320 Management, leasing, and development services 10,901 12,403 Other 23,239 5,541 27,432 5,758 Total revenues 481,542 194,625 447,953 192,059 EXPENSES: Maintenance, taxes, and utilities 138,766 48,629 127,664 49,278 Other operating 56,478 16,026 49,448 14,227 Management, leasing, and development services 6,521 6,660 General and administrative 23,066 21,750 Interest expense 108,993 48,624 95,512 50,401 Depreciation and amortization 106,978 29,385 99,858 29,473 Total expenses 440,802 142,664 400,892 143,379 Gains on land sales and other nonoperating income 3,670 594 2,252 1,189 44,410 52,555 49,313 49,869 Income tax expense (658) Equity in income of Unconsolidated Joint Ventures 29,014 28,700 Income before minority and preferred interests 72,766 78,013 Minority and preferred interests: TRG preferred distributions (1,845) (1,845) Minority share of consolidated joint ventures (3,722) (3,578) Distributions in excess of minority share of income of consolidated joint ventures (7,973) (2,847) Minority share of income of TRG (17,866) (21,777) Distributions in excess of minority share of income of TRG (16,268) (9,910) Net income 25,092 38,056 Preferred dividends (10,975) (10,975) Net income allocable to common shareowners 14,117 27,081 SUPPLEMENTAL INFORMATION: EBITDA - 100% 260,381 130,564 244,683 129,743 EBITDA - outside partners' share (28,831) (59,170) (26,033) (58,780) Beneficial interest in EBITDA 231,550 71,394 218,650 70,963 Beneficial interest expense (94,307) (25,289) (84,938) (24,996) Beneficial income tax expense (658) Non-real estate depreciation (2,189) (2,013) Preferred dividends and distributions (12,820) (12,820) Funds from Operations contribution 121,576 46,105 118,879 45,967 Net straightline adjustments to rental revenue, recoveries, and ground rent expense at TRG % 1,319 275 1,147 499 (1) With the exception of the Supplemental Information, amounts include 100% of the Unconsolidated Joint Ventures. Amounts are net of intercompany transactions. The Unconsolidated Joint Ventures are presented at 100% in order to allow for measurement of their performance as a whole, without regard to the Company's ownership interest. In its consolidated financial statements, the Company accounts for its investments in the Unconsolidated Joint Ventures under the equity method. TAUBMAN CENTERS, INC. Table 4- Reconciliation of Net Income Allocable to Common Shareowners to Funds from Operations For the Periods Ended September 30, 2008 and 2007 (in thousands of dollars; amounts allocable to TCO may not recalculate due to rounding) Three Months Ended Year To Date 2008 2007 2008 2007 Net income allocable to common shareowners 9,197 7,849 14,117 27,081 Add (less) depreciation and amortization: Consolidated businesses at 100% 35,464 33,757 106,978 99,858 Minority partners in consolidated joint ventures (2,928) (4,151) (10,423) (11,881) Share of unconsolidated joint ventures 5,777 5,899 17,091 17,267 Non-real estate depreciation (748) (676) (2,189) (2,013) Add minority interests: Minority share of income of TRG 7,445 6,849 17,866 21,777 Distributions in excess of minority share of income of TRG 3,927 3,640 16,268 9,910 Distributions in excess of minority share of income of consolidated joint ventures 1,578 1,806 7,973 2,847 Funds from Operations 59,712 54,973 167,681 164,846 TCO's average ownership percentage of TRG 66.6% 65.9% 66.5% 65.9% Funds from Operations allocable to TCO 39,764 36,205 111,588 108,700 TAUBMAN CENTERS, INC. Table 5- Reconciliation of Net Income to Beneficial Interest in EBITDA For the Periods Ended September 30, 2008 and 2007 (in thousands of dollars; amounts allocable to TCO may not recalculate due to rounding) Three Months Ended Year To Date 2008 2007 2008 2007 Net income 12,855 11,507 25,092 38,056 Add (less) depreciation and amortization: Consolidated businesses at 100% 35,464 33,757 106,978 99,858 Minority partners in consolidated joint ventures (2,928) (4,151) (10,423) (11,881) Share of unconsolidated joint ventures 5,777 5,899 17,091 17,267 Add (less) preferred interests, interest expense, and income tax expense: Preferred distributions 615 615 1,845 1,845 Interest expense: Consolidated businesses at 100% 36,039 33,628 108,993 95,512 Minority partners in consolidated joint ventures (4,951) (3,736) (14,686) (10,574) Share of unconsolidated joint ventures 8,570 8,369 25,289 24,996 Income tax expense 218 658 Add minority interests: Minority share of income of TRG 7,445 6,849 17,866 21,777 Distributions in excess of minority share of income of TRG 3,927 3,640 16,268 9,910 Distributions in excess of minority share of income of consolidated joint ventures 1,578 1,806 7,973 2,847 Beneficial Interest in EBITDA 104,609 98,183 302,944 289,613 TCO's average ownership percentage of TRG 66.6% 65.9% 66.5% 65.9% Beneficial Interest in EBITDA allocable to TCO 69,670 64,663 201,607 190,971 TAUBMAN CENTERS, INC. Table 6- Balance Sheets As of September 30, 2008 and December 31, 2007 (in thousands of dollars) As of September 30, December 31, 2008 2007 Consolidated Balance Sheet of Taubman Centers, Inc.: Assets: Properties 3,806,039 3,781,136 Accumulated depreciation and amortization (1,017,609) (933,275) 2,788,430 2,847,861 Investment in Unconsolidated Joint Ventures 93,419 92,117 Cash and cash equivalents 36,698 47,166 Accounts and notes receivable, net 40,947 52,161 Accounts and notes receivable from related parties 2,226 2,283 Deferred charges and other assets 220,143 109,719 3,181,863 3,151,307 Liabilities: Notes payable 2,784,189 2,700,980 Accounts payable and accrued liabilities 243,829 296,385 Dividends and distributions payable 21,973 21,839 Distributions in excess of investments in and net income of Unconsolidated Joint Ventures 152,248 100,234 3,202,239 3,119,438 Preferred Equity of TRG 29,217 29,217 Minority interests in TRG and consolidated joint ventures 7,327 18,494 Shareowners' Equity: Series B Non-Participating Convertible Preferred Stock 27 27 Series G Cumulative Redeemable Preferred Stock Series H Cumulative Redeemable Preferred Stock Common Stock 529 526 Additional paid-in capital 554,140 543,333 Accumulated other comprehensive income (loss) (8,422) (8,639) Dividends in excess of net income (603,194) (551,089) (56,920) (15,842) 3,181,863 3,151,307 Combined Balance Sheet of Unconsolidated Joint Ventures (1): Assets: Properties 1,078,007 1,056,380 Accumulated depreciation and amortization (358,771) (347,459) 719,236 708,921 Cash and cash equivalents 22,779 40,097 Accounts and notes receivable 19,677 26,271 Deferred charges and other assets 23,578 18,229 785,270 793,518 Liabilities: Notes payable 1,108,605 1,003,463 Accounts payable and other liabilities 44,794 55,242 1,153,399 1,058,705 Accumulated Deficiency in Assets: Accumulated deficiency in assets - TRG (202,458) (149,009) Accumulated deficiency in assets - Joint Venture Partners (166,129) (112,709) Accumulated other comprehensive income (loss) - TRG (287) (2,354) Accumulated other comprehensive income (loss) - Joint Venture Partners 745 (1,115) (368,129) (265,187) 785,270 793,518 (1) Amounts exclude University Town Center. TAUBMAN CENTERS, INC. Table 7 - 2008 Annual Outlook (all dollar amounts per common share on a diluted basis; amounts may not add due to rounding) Range for Year Ended December 31, 2008 Funds from Operations per common share 3.01 3.07 Real estate depreciation - TRG (1.94) (1.87) Depreciation of TCO's additional basis in TRG (0.13) (0.13) Distributions in excess of earnings allocable to minority interest (0.30) (0.23) Net income allocable to common shareowners, per common share 0.64 0.84
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